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cost of retirement

Can you Afford the Cost of Retirement?

Spending during retirement varies, but generally people 65 and older spend an average of $45,700 a year as of 2016. That comes out to about $3,800 a month, which is more than the typical Social Security check. The cost of retirement is important to know.

The total monthly spending amount is less than the average household in the U.S., which doesn’t leave much wiggle room in retirement.

Retirement spending

Once retirement kicks in, most think that the cost of living will go down considerably. That may be the case in some areas, but sometimes cost of living can increase.

The following data from the Bureau of Labor Statistics is a breakdown of the main monthly costs for retirees.

cost of retirement

Housing

$1,300 – Whether you have a mortgage or not, housing is typically the most expensive monthly cost for everyone. These costs can fluctuate and may never go away. This number also includes property taxes, insurance, utilities, and any repairs that may occur.

Food

$480 – While this is usually a hefty cost for the month, retirees spend almost 20 percent less than the typical household.

Transportation

$560 – This category is significantly lower than the average household, which spends about $6,800 annually. Retirees are able to catch a break here and pay one-third less.

Healthcare

$499 – Insurance premiums are a major expense for retirees. This expense continues to rise as you age. This pattern does change once you turn 75, according to the Bureau of Labor Statistics. The cost will gradually decrease by about $30 after that.

Pension/Social Security

$230 – If anyone in the household is still working, they will continue to pay the usual Social Security and pension. This can add up and add to the monthly costs.

Entertainment

 $197 – Retirement comes with plenty of downtime. Entertainment costs are roughly the same for those in their 20s and 30s as they are for those in retirement.

Other

$200 – “Other” covers any extra expenses that don’t fit into the other categories. An example is money put towards charity or “pocket change”.

These expenses are the reason that preparing for retirement is so crucial. Do the research beforehand and know the cost of retirement so you can be ready and enjoy your retirement.

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